Virginia Gov. Unveils Transportation Plan with Auto Insurance Fee Hike

January 23, 2006

Virginia Governor Timothy M. Kaine is proposing an increase in the state’s auto insurance premium fee and a hike in the auto sales and use tax as part of a broad multi–year transportation initiative.

The $3.7 billion four-year plan is intended to fund transportation improvements, encourage smarter transportation planning, give local communities more zoning control and relieve traffic congestion. The initiative increases local highway construction programs for urban, secondary and primary projects by about 90 percent. It also doubles the amount of money spent on mass transit options.

The revenue side of the plan relies on increasing fees paid by to those who use the state’s roads. In Kaine’s words, the plan is crafted so that “those who benefit from these transportation improvements are the same people who pay for them.”

It calls for a 2.25 percent increase in the auto insurance premium fee, which would raise an estimated $1 billion. One-third of all auto insurance premium fees are to be dedicated to transportation projects. “Virginia is currently the 41st lowest state in the nation in terms of average auto insurance premiums, and the fee increase will add only $18 to the cost of a policy for a typical Virginia driver,” Kaine maintained.

In addition the plan would boost the motor vehicle sales and use tax from three to five percent, which Kaine says would bring it in line with neighboring states and match the sales tax on other items in the state.

In addition, he proposes higher fees for heavier vehicles and stiffer fines on traffic offenses.

“This is a fiscally responsible plan that addresses our transportation challenges in creative ways,” Kaine said. “We will change the way we do business, always insisting on accountability, and providing local officials with the tools they deserve to better link transportation and land use planning. We will partner with localities and the private sector, relying on modest, reliable revenues generated by those who actually use our transportation network.”

Kaine’s office said his plan reflects both the sense of urgency and the demand for accountability expressed by Virginians who spoke out during a series of 11 town hall meetings he has hosted since last November.

“This initiative identifies stable, long-term funding streams that meet our transportation needs. Our plan will provide over an additional $1 billion a year for transportation, coming from a combination of new revenue and public-private partnerships,” Kaine said.

It also includes a “lock up” on the state’s transportation funds to prevent them from being used for other purposes.

“I am committed to work in a bipartisan way with the Senate and House of Delegates to address our transportation challenges in a serious way during this session,” Kaine said.

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